Tax Update April 2013

Tax Update: June 2013

Changes to the corporate income tax objection and appeal process

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The Inland Revenue Authority of Singapore (IRAS) will with effect from 1 January 2014, implement certain administrative changes made to the corporate income tax objection and appeal process, so as to, amongst other objectives, expedite the closure of tax issues and achieve tax certainty.

The changes have been made by the IRAS after consultation with various stakeholders, and are set out in its e-Tax guide published on 28 February 2013.

Scope

The revised objection and appeal process will apply to the following taxpayers:

  • Companies
  • Registered business trusts
  • Real estate investment trusts
  • Permanent establishments in Singapore, including Singapore branches of foreign companies

It will cover all assessments raised by the Comptroller of Income Tax (CIT), except for assessments raised based on estimated chargeable income furnished by the taxpayer.

Stages in the objection and appeal process

The objection and appeal process consists of four stages:

EY - Stages in the objection and appeal process

What will change

The revised administrative procedures mainly relate to those at the objection and review stages.

Prior to 1 January 2014 

From 1 January 20141

Objection stage

  • The taxpayer must lodge an objection to the Notice of Assessment (NOA) within 30 days from the date of service of the NOA.
  • Taxpayers lodge their objection, stating their precise grounds of objection, via a letter or an e-mail.
  • There is no acknowledgement of the validity and receipt of an objection.

  • The deadline to lodge an objection will, as an administrative concession, be extended to two months from the date of service of the NOA.
  • Taxpayers are encouraged to lodge an objection electronically via IRAS’ e-Services (in myTax Portal in the IRAS website) or via an Objection Form. (The form includes a checklist to ascertain whether or not the objection filed is valid.)
    [As before, taxpayers may also lodge an objection via a letter or an email, stating the precise grounds of objection.]
  • The CIT will only issue an acknowledgement of receipt and validity2 of an objection if it is lodged via IRAS’ e-Services or an Objection Form (i.e., instant acknowledgement via IRAS’ e-Services/within 14 days via the Objection Form). No acknowledgement will be issued if the objection is lodged via a letter or an e-mail.
  • If the objection lodged is invalid, IRAS will inform the taxpayer who may file another objection, provided the two-month deadline for lodging an objection has not lapsed.

Review stage

  • No fixed time frame for the CIT to complete the review of an objection lodged by the taxpayer.
  • No time frame for the taxpayer to reply to the CIT’s decision on the item under objection.
  • The CIT is unable to bring to a closure the taxpayer’s objection lodged when:
    • Information requested remains long outstanding
    • The taxpayer does not reply to the CIT’s decision on the item under objection
    • The taxpayer’s agreement to the CIT’s decision is qualified.

  • The CIT will review and inform the taxpayer in writing within six months from the date of receipt of the taxpayer’s last correspondence with complete information and supporting schedules. For complex cases requiring a longer period for review, the CIT will inform the taxpayer the estimated time required for the review.
  • The taxpayer has to inform the CIT in writing within three months from the date of the CIT’s letter, whether or not they agree with the CIT’s decision on the item under objection.
  • To ensure closure of an objection, the CIT will issue a Notice of Refusal to Amend when:
    • Information requested by the CIT remains outstanding after two years3 from the date of receipt of the objection lodged by the taxpayer
    • The taxpayer does not reply to the CIT’s decision on the item under objection within three months from the date of the CIT’s letter
    • The taxpayer’s agreement to the CIT’s decision is qualified.

      [With the issue of a Notice of Refusal to Amend, the taxpayer will either have to accept the CIT’s decision, in which case the assessment will be regarded as final and conclusive, or file a Notice of Appeal to the Income Tax Board of Review within 30 days from the date of the Notice of Refusal to Amend if it does not agree with the CIT’s decision.]

Comments

The changes made by the IRAS are intended to streamline the objection and appeal process and expedite the closure of taxpayers’ income tax matters. The milestones set at each stage of the process are guidelines given to both CIT and taxpayers and we believe that the CIT will continue to exercise flexibility in granting extension of time in genuine circumstances.

  • 1The changes will apply to Notices of Assessment issued on or after 1 January 2014.
  • 2Acknowledgement of the validity of the objection is based on the declaration in the Objection Form or IRAS’ e-Services.
  • 3The CIT generally expects a reply from the taxpayer within two months from the date of the CIT’s letter, and will send reminders if no reply is received after the deadline. A final reminder will be sent to the taxpayer, highlighting the consequences of not furnishing a reply to the CIT’s queries, before the issue of a Notice of Refusal to Amend.